National Savings & Investments is selling a guaranteed equity bond (Geb) which promises returns of up to 50% of any rise in the FTSE 100 over five years and guarantees to protect the investor's original capital if stockmarkets fall.

Such bonds have soared in popularity during the past 18 months as banks tap into public fears about the recession, credit crunch and yo-yoing stockmarkets. But the capital protection comes at the cost of a reduction in any potential returns. These are calculated by comparing the start level of the FTSE 100 index (averaged over the first five days of the investment term) to the end level (averaged over the final six months).

If the averaged index end level is 20% greater than the averaged index start level at the end of the five-year term, £10,000 invested in this NS&I bond would earn a gross return of £2,000 at the end of the term.

If the index end level was 55% greater than the index start level at the end of the term, £10,000 invested would earn a gross return of £5,000, because the maximum return is 50%.

The bond, which is available online at nsandi.com, by phone with a debit card on 0500 500 000 or by post using an application form that can be requested by phone or downloaded from the website, went on sale last week. Although the offer is set to run until 23 November, NS&I's last Geb sold out very quickly.

Gebs are technically part of the family of so-called structured products, where an offer to get your money back usually involves a behind-the-scenes counterparty – usually a separate company – that invests your cash, often in complex derivatives markets.

Gebs from NS&I are backed by HM Treasury, which has never defaulted on its debts.